Which cover is best?

January 30, 2017

We’re often asked which the best cover to have; health insurance, life insurance or a health cash plan. Perhaps a better question is ‘what is right for your circumstances?’

Many people can be confused that they need to choose one exclusive of the others, but the reality is that they are designed for very different purposes. Here we try to dispel some of that confusion by explaining the main differences between these solutions, which fall under:

What you are covered for

When you are covered

How much you can be covered for

Life Insurance Life insurance is an amount of money that you insure to cover things such as your debts and to take care of your loved ones when you pass away. People often take into account debts such as their mortgage, personal loans, credit cards, and future education costs if they have children. This can serve as a replacement income for your family if they were relying on yours, or it can be used to pay off all your debts in one go.

Health Insurance Frequently referred to as Private Medical Insurance (PMI), you have this to help with the cost of medical bills. It can be used to help with the costs of private diagnosis and treatment (dependent on the cover the provider will offer) and is often used to either queue jump the NHS or to get a “better” level of treatment in your choice of private hospital, possibly with your choice of doctor. Common claims on PMI tend to be for things like cataracts, hip and knee replacements which would not normally be classed as essential on the NHS and regularly have a long waiting list.

Health Cash Plan Health cash plans are designed to help cover (or recover) the cost of elective or routine treatment for things such as dentist bills, opticians etc. with the added benefit that if you do get sick, many health cash plans will offer small amounts of benefits for things like therapies and consultations. So, for example, you could utilise the consultation benefit to be seen by a private consultant initially and then transfer back to the NHS to continue treatment once you have run out of benefit. All of this aims to reduce your waiting times and establish any required treatment, which can be a more cost effective way to compliment a PMI policy.

Which is more important?

As you can see, there is a big difference between these types of cover. It’s not a matter of picking one. You need to assess your individual situation and decide what is right for you.